Why drone solutions can help investors understand risk better and make decisions faster

The risks of investing in India’s foundations for the future

Investing in the pillars that contribute to the growth of the fastest developing large economy in the world is an enticing prospect for any investor, however, it is also a complex exercise in risk-taking and astute decision making. India will only increase its’ infrastructure spending over the next decade or so with more than 3/4th of infrastructure investment being directed towards power, transport, and urban sectors.

SBI capital market research projects a total investment of 50 Lakh crore to be directed towards power, transportation and logistics infrastructure.

Market players and stakeholders in this ecosystem find themselves grappling with the prospect of attractive returns on the upside but also considerable risks across parameters such as sponsor health, regulatory environment, market dynamics, operations, maintenance, and construction related risk. Of these the most fundamental and the first point of analysis comes from understanding the engineering feasibility of the project and the socio-economic as well as ecological impacts that come with the investment and construction.

The challenges in quantifying and mitigating risks

Typically, lenders take up the services of an Independent Engineer (LIE) and that of an Insurance Advisor (LIA) to understand and evaluate a project before investing. The scope of the LIE is vast. It involves casting an objective lens over critical aspects covering everything from reviewing from EPC contracts to translating engineering studies into financial risk bankers can understand.

LIEs do however face a number of challenges in trying to assess the true nature of the project.

1. Data collection

LIE’s are experienced engineers who rely on third-party data collection agencies to keep pace with the assessment timelines and the lack of oversight leads to miss details that often derail a project by months.

In a roads project, a temple was adjacent to the site of a proposed flyover. This aspect was overlooked in the DPR phase. The flyover got built, and subsequently erased due to local pressure, wasting INR 21 cr in the process.

Shreekant Harsha: Life Cycle Analysis of A Road Infrastructure Project Using BIM

2. Data processing

The turnover from collection to delivery is something that takes months for a large scale project. The paucity nature of storage of data points, in turn, results in a lack of conceptual depth and lack of portability.

3. Data analysis

The onus to know the status of the project is often left to periodic updates from a handful of mobile phone photographs randomly sampled across the entire stretch. Predictably this form of reporting leads to conflicting claims from landowners, contractors, auditors, and consultants about construction progress and quality.

How drone solutions can help investors and LIEs

The problems of inefficient and inadequate data collection, ambiguity in understanding ground reality and the delays in decision making are aspects that drone solutions are adept at addressing.

“Drone solutions” or a drone enabled solution is a multi-layered solution stack with the drones at the base functioning as data collection platforms, the data collected in, then analysed, stored, and actualised by a web-based software solution.

How drone solutions help address challenges:

1. Data collection

Drone driven data collection acquire more than 40-50 times the quantity of data in less than half or a third of the time for every unit area of a project.

2. Data processing

Drone based solutions process data leveraging cloud based workflows that automate and enable processing overnight. Since the data is hosted on the cloud and delivered via secure web-based portals data portability is never an issue allowing for on-demand data retrieval.

3. Data analysis

Drone-based solutions offer insights in a way investors can understand to make more informed decisions. The clarity and depth of information leave stakeholders no choice but move to make collaborative and quicker decisions to resolve disputes.

The potential impact of drone driven solutions

Investors and financial stakeholders have much to gain from drone based solutions, as it allows for a near real-time connection to the qualitative performance and qualitative health of an investment without having to worry about data or time. In a future where drone based solutions are used in conjunction with other technologies such as IoT, AI and remote sensing we can have a world wherein

1. All stakeholders effectively use an irrefutable source of truth to come to agreements at a ground level near-real time.
2. All financial stakeholders of a project can effectively quantify risks, allocate budgets, and release funds.
3. Decision makers at the top no longer need to rely on manual ground-based reporting to assess ground reality.

By Mughilan TR, Co-Founder, Skylark Drones